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M/s Shubham Food Products Versus Income Tax Officer

2015 (10) TMI 1878 - ITAT NAGPUR

Disallowance on account of depreciation - grant of subsidy by the DIC - Held that:- The basic requirement is that the cost of an asset should be made by the grant of subsidy. As against that, the Assessing Officer has mentioned that the subsidy was in the form of liability which was to be re-paid by the assessee may be after a long period of 15 years. The Assessing Officer has not examined the exact claim of subsidy pronounced by the appropriate authority as also the terms of clauses of re-payme .....

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ed for statistical purposes only. - Decided in favour of assessee for statistical purposes. - ITA No. 396/Nag/2013 - Dated:- 20-7-2015 - Mukul K. Shrawat, JM, J. For the Appellant : None For the Respondent : Shri Narendra Kane ORDER This appeal filed by the assessee is emanating from the impugned order dated 28th August 2008, passed by the learned Commissioner (Appeals)-II, Nagpur, for the assessment year 2008-09, on the following grounds of appeal:- "1. The learned CIT(A) erred in confirmi .....

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weets and namkeen. In respect of ground no.1, it was noticed by the Assessing Officer that there was a possibility of non-verification of certain expenses and also an element of personal expenses, hence, on agreed basis, he has disallowed the following expenses:- Factory cleaning expenses ₹ 20,000 Traveling expenses ₹ 10,000 Repair and maintenance ₹ 20,000 Total ₹ 50,000 3. When the matter was carried before the first appellate authority, the learned CIT(A) has affirmed t .....

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4,58,320, from DIC, Government of Maharashtra. The Assessing Officer has also mentioned that the subsidy was shown as a liability in the Balance Sheet. The Assessing Officer has also mentioned a letter pertaining to the grant of subsidy by the DIC wherein it was mentioned that the subsidy was granted for a period of 15 years. However, the Assessing Officer has invoked the relevant provisions of the Act and re-calculated the depreciation in the following manner:- "4. The assessee has receiv .....

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ets of factory. 4.1 As above subsidy granted against the assets the value of assets shall be reduced by the amount of subsidy from the WDV of assets while calculated the depreciation. He has not deducted the subsidy from WDV and calculated depreciation. By way this he has claimed excess depreciation than admissible, hence, excess depreciation claimed by him is added to his income. The calculation of depreciation enclosed with this order as "Annexure- A" as part of this order. As per P& .....

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affirmed the action of the Assessing Officer, primarily on the ground that the in view of the insertion of Explanation-10 to section 43(1) of the Act, the subsidy granted for acquisition of fixed asset should be reduced from the cost of the asset. Hence, the action of the Assessing Officer was affirmed. 6. At the outset, it is worth to mention that, in the past, on the request of the learned Counsel for the assessee, this case was adjourned. However, on the date of hearing, an application has be .....

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